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US, India in Talks on Deal That May Cut Tariff Below 20%
The United States and India are reportedly closing in on an interim trade agreement that could reduce proposed tariffs on Indian exports to below 20%—a significant softening from earlier levels of around 26% or higher. An Indian trade delegation is expected to travel to Washington this week for another round of negotiations aimed at finalizing the first phase of the deal. Notably, India has not received a formal tariff demand letter—unlike many other countries facing U.S. tariffs of 25% to 50%—indicating progress in bilateral talks. The interim agreement is expected to be announced through a joint statement, establishing a temporary tariff rate below 20%. Further negotiations will continue throughout the year, with a broader trade agreement anticipated by fall.
ECONOMICS
7/12/20251 min read
Why It Matters:
Strategic Positioning: India could be among the few countries securing tariff relief from the Trump administration amid a global tightening of trade policies.
Export Support: The deal offers much-needed relief to Indian export sectors such as pharmaceuticals, textiles, steel, auto components, and seafood, which are vulnerable to high U.S. tariffs.
Deadline Pressure: The talks aim to conclude before August 1, when a 90-day moratorium on new U.S. tariffs ends. If no agreement is reached by then, steep tariffs may be imposed on unresolved trade relationships.
Key Sticking Points:
The U.S. is pushing India to open its markets for American agricultural, dairy, and biotech products. However, India remains firm on protecting its farmers and sensitive sectors. Instead, New Delhi is proposing tariff cuts on less sensitive goods, including medical devices, almonds, and energy products.
Trade analysts are closely watching these developments, as a successful interim deal could stabilize bilateral trade ties and provide momentum for a more comprehensive agreement later in 2025.